In Meeting, Buffalo Sabres Owner Made Case for Fracking

ALBANY -- Terry Pegula, the billionaire owner of the Buffalo Sabres and Rochester Americans, made his fortune drilling for natural gas in the Marcellus Shale, the massive rock formation that stretches across a large swath of the Northeast.

As New York officials continue to weigh whether to allow shale-gas drilling, Pegula -- whose gas company, East Resources, was sold for $4.7 billion to Royal Dutch Shell in 2010 -- has largely stayed out of the debate.

But in late November 2011, nine months after he took control of the National Hockey League club, Pegula gathered Buffalo-area officials and state lawmakers in a boardroom at then-HSBC Arena. There, he and members of his East Resources team made their pitch for large scale hydraulic fracturing, the much-debated method used in the gas-extraction process that New York state has yet to green light.

"He and his former scientist colleagues and the rest of his management called in our delegation to a meeting where they proceeded to explain to us how this is a safe industry and everything will be fine, we just need to have access to doing this in New York" Assemblywoman Crystal Peoples-Stokes, D-Buffalo, said this week. "They said New York is behind the eight ball on this one and they should jump right in and let us do this."

Peoples-Stokes mentioned the meeting at a Tuesday news conference in Albany, where members of the Assembly criticized Gov. Andrew Cuomo's administration for not being more open about its ongoing review of hydrofracking. Three other lawmakers confirmed the 2011 meeting, and a separate but similar presentation was given to city of Buffalo officials the same month.

Once one of Pennsylvania's most-active political donors, Pegula has resisted getting involved in state-level politics or policy debates in New York. He and his wife donated more than $400,000 to Pennsylvania candidates between 2006 and 2011, including $230,000 to now-Gov. Tom Corbett, a gas-drilling supporter.

Pegula hasn't donated to any New York politicians since purchasing the hockey teams, according to state records.

The November meetings, the legislators said, largely focused on promoting the science of fracking, a process in which a large-volume mix of water, sand and chemicals is injected into underground shale formations to fracture the rock and unlock natural gas. Some members of the state Legislature's Buffalo-area personally attended, while others sent their staff.

"It was us with the senators and staff. They gave a presentation about some of the science behind it," said Assemblyman Raymond Walter, R-Amherst, Erie County. "They pretty much talked about how (fracking) works, what the geology of it is, what the science behind the whole process is."

A spokesman for the Sabres on Thursday confirmed the meetings but did not provide further comment.

It's unclear if Pegula has discussed the issue with other New York officials since the meetings 14 months ago. His name does not appear on Cuomo's official schedules through October, the most recent month released.

State Department of Environmental Conservation spokeswoman Emily DeSantis said the agency has met with Pegula and East Resources staff over the years when his company was actively drilling in the Trenton-Black River formation in the Southern Tier. But she said the DEC was "not aware of any meetings with Mr. Pegula on (high-volume hydraulic fracturing)."

The DEC faces key February deadlines in its fracking review, which was first launched in 2008. The agency has to finalize a set of proposed regulations by Feb. 27 or allow them to expire, and would have to release a lengthy environmental review by Wednesday in order to meet that deadline.

Lawmakers came away from the meeting with Pegula with a range of opinions.

Assemblyman Dennis Gabryzsak, D-Cheektowaga, Erie County, said the information Pegula and his team presented was "helpful," but not determinative in deciding whether to support fracking. Gabryzsak, who did not attend the meeting but sent a staff member, says he has an "open mind" toward hydrofracking, but could only support it if all of the chemicals used in the process are required to be disclosed.

"Go back a couple of years and (Pegula's) a guy in the industry where he made his money," Gabryzsak said. "As far as listening to him, while it may be a biased view, I think it was good to listen to. What we've done is we're collecting data. We're doing just a ton of research on fracking on both sides."

For Walter, it reaffirmed his support for fracking -- if it can be done safely. Walter said the state has been losing out on too many jobs to Ohio and Pennsylvania, states where shale-gas drilling is permitted.

"I thought that the presentation was excellent. I thought it was very compelling," he said. I thought there was a lot of what appeared to be good heart and science behind what they were talking about."

Peoples-Stokes, however, came out with a different view. She said she was unsatisfied with the response when she asked Pegula and his team what is done with the millions of gallons of wastewater generated during the process.

"From that point on, I knew that I was opposed to hydrofracking," she said. "If natural gas is naturally in the earth, it was naturally created by the creator, there's going to be a natural way to get it out of the earth. And until that day comes, it should stay right where it is."